The Covered Calls for Dummies Thread Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Covered Calls for Dummies Thread

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: jghutchison who wrote (309)	4/29/2001 11:20:19 AM
From: BDR	Read Replies (2) of 5205

<<Option time premium accelerates toward expiry, so you want to sell close in options, and buy far out options...like leaps.>> Nit picking: I assume you mean that option time premium deterioration accelerates towards expiry. A calendar spread (simultaneous sale of a shorter term option and purchase of a longer term option) takes advantage of the different rates of decay of the time premium to yield a profit. I don't think that means (and perhaps you were not advocating) that buying long term options alone is a good idea. Buying longer term options or even LEAPS is better than buying near term options but only because you have more time to see if you are wrong before you face a stiff penalty. I suspect that selling LEAPS is still more likely to be profitable than buying them.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next